All change for wills and intestacy?

With a raft of changes to the law on wills and intestacy set to come into force this month, Naomi Ireson, a contentious probate lawyer, examines whether the reforms brought about by the Inheritance and Trustees’ Powers Act 2014 (ITPA 2014) go far enough.

Changes to intestacy rules

Intestacy changes highlighted by Law Society, LNB News 02/10/2014 199

Solicitors should be aware of the changes brought in by ITPA 2014, the Law Society has advised. ITPA 2014 has made changes to the intestacy rules, family provision claims and the Trustee Act 1925. The Law Society has issued guidance to help solicitors understand the changes.

Challenging and disputuing the intestacy rules

We are often consulted by people who have received no, or inadequate, provision under the terms of a will or on intestacy. Typically, the claims are made pursuant to the Inheritance (Provision for Family and Dependants) Act 1975 (I(PFD)A 1975), where the claimant seeks reasonable financial provision from the estate. We also frequently challenge the validity of a will.

ITPA 2014 is to be welcomed as it treats a spouse or civil partner more generously on intestacy as it provides the spouse with half of anything in excess of £250,000 (as opposed to a life interest under the earlier rules). If the intestate leaves no issue, the residuary estate is held for the surviving spouse or civil partner absolutely (previously parents, siblings and other family members inherited).The statutory legacy may increase over time however because Schedule 1 of the Act provides that, at least every 5 years, the Lord Chancellor must specify, by statutory instrument, the amount of the statutory legacy.  The Lord Chancellor’s obligation to review is also triggered if the Consumer Prices Index has risen by more than 15%.  In theory therefore the statutory legacy should not fall behind the real level of prices.  I would anticipate the increase will reduce the number of claims being made under I(PFD)A 1975 by spouses or civil partners.

The new Act also resolves a number of areas of ambiguity in respect of claims under I(PFD)A 1975, such as whether a claim can be commenced prior to a grant of representation being issued. Crucially, in my view, it extends the definition of ‘child of the family’, so that it now includes a single parent family. Previously, the child had to be a child of a family in relation to a marriage or civil partnership to which the deceased was a party. I(PFD)A 1975, s 1(1)(d) has now been extended to include any person who was treated by the deceased as a child of any family in which the deceased had a parental role. I am also expecting this to have far reaching consequences for grandchildren who have been raised as the child of the deceased. The new provision makes it clear that they can pursue claims under I(PFD)A 1975, s 1(1)(d).

Claimants who have been ‘maintained’ by the deceased pursuant to I(PFD)A 1975, s 1(1)(e) will benefit from the removal of the ‘balance sheet’ assessment. Previously they had to show that the deceased contributed more than the claimant did in order to prove they had been maintained. The amended s 1(3) requires the claimant to simply establish that the deceased had been making a substantial contribution towards their reasonable needs. Contributions made between people within a domestic context will no longer be weighed against one another.

Are further changes to the intestacy rules required?

While I welcome the changes made by ITPA 2014, there is an underlying concern that the reforms do not go far enough to take account of the changing circumstances of modern family structures in 21st century England and Wales.

Both the rules of intestacy and family provision under I(PFD)A 1975 continue to be out of step with what is happening in society at large. The reforms fail to fully recognise that many couples prefer to co-habit and have children without marrying. These families in particular will continue to suffer injustice under the new regime. My current advice to people about the need to have a valid will, therefore, remains the same. This is particularly critical for people who co-habit and have children without marrying. The Inheritance (Cohabitants) Bill is eagerly awaited to see whether further reforms will be forthcoming.

What are the implications of these intestacy rule changes?

ITPA 2014 clarifies that a claim under I(PFD)A 1975 can be issued prior to the grant of representation. This was previously an area of ambiguity. It is a frequent problem in day-to-day practice, which sometimes results in the need for practitioners to issue a citation forcing the personal representative to take out the grant so that a claim can then be issued.

An application to sever the deceased’s share in jointly-owned property, under I(PFD)A 1975, s 9, can now be made after the six-month time limit, as can applications to extend limitation under I(PFD)A 1975, s 4.

The increase in provision on intestacy for spouses and civil partners means many more children and other family members will be excluded from their parents’ estates under the intestacy rules. This could see a rise in claims by children under I(PFD)A 1975.

I(PFD)A 1975 claims by those who were maintained by the deceased will also require additional analysis, as practitioners will need to consider whether the deceased assumed responsibility for the claimant and the extent of that assumption of responsibility.

Waht risks are likley to arise following these changes to the intestacy rules?

Where wills are drafted following the commencement date, the will drafter must bear in mind some crucial points:

• the definition of chattels under the Act is shortened. There is no longer a prescribed list set out by the Administration of Estates Act 1925, s 55(1)(x). ‘Personal chattels’ now means ‘tangible moveable property’, with some stated exceptions. Those preparing wills need to be aware that in more valuable estates where there may be collections of antiques or art etc which the testator/testatrix may wish to pass alongside his other personal possessions may in fact be excluded from the definition of personal possessions

• clients without a valid will need to be made aware of the changes to the intestacy rules and the impact on parents and siblings where the deceased dies leaving a spouse or civil partner, but no issue

• similarly, care also needs to be taken where someone has separated from their spouse but has not yet divorced as the surviving spouse’s share of the estate is now materially greater than it was under the old rules

• clients should be advised to give more careful consideration to those who may be regarded as a dependant or a child of the family so they can outline their reasons for excluding them from a will which could be relevant evidence in any defence to a claim made under I(PFD)A 1975

Are there any trends emerging in the law in this area?

There are many couples who co-habit and have children without marrying or entering into a civil partnership. This trend, together with the number of people who die intestate, creates a huge number of potential claims under I(PFD)A 1975 involving people who have lived with the deceased as husband and wife for at least two years prior to the date of death, or were financially dependent upon them. Children who are born out of wedlock also creates a number of issues in respect of paternity where the deceased is not named on the child’s birth certificate. The developments in this area in terms of legislation do not, as yet, provide for these loopholes.

Following the case of Ilott v Mitson [2014] EWHC 542 (Fam), [2014] All ER (D) 189 (Mar), we have seen a discernible increase in the number of adult children successfully claiming under I(PFD)A 1975.

Challenges to the validity of a will continue to be constrained by onerous evidential difficulties, but in light of recent cases such as Schrader v Schrader [2013] EWHC 466 (Ch), [2013] All ER (D) 89 (Mar) and Schomberg v Taylor [2013] EWHC 2269 (Ch), [2013] All ER (D) 74 (Jan) I would hope to see the number of successful challenges rise. This is particularly true of challenges based upon allegations of undue influence, which are currently so difficult to sustain. Claimants have historically been wary of pursuing undue influence claims, but the recent case law suggests a welcome trend by the courts to ignore the need for a claimant to establish that there is ‘no other explanation other than coercion’ and moves the burden of proof closer to that of presumed influence in inter vivos undue influence claims.

Naomi Ireson is a legal executive in the civil litigation and private client department at Slee Blackwell Solicitors. She specialises in all aspects of contentious probate disputes, together with probate-related professional negligence claims. In addition, she also deals with wills, trusts and probate, together with Court of Protection matters. She is also editor of Slee Blackwell’s popular probate bulletin, The Testator.

This article is based on an interview by Jane Crinnion.

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